U.S. President Donald Trump announced on the 26th (local time) that he would impose a 25% tariff on imported cars. Following the 25% tariffs imposed on steel and aluminum since the 12th, an additional tariff is applied to another item.
On that day, President Trump signed an executive order outlining this decision in the Oval Office. He noted, "What we will do is impose a 25% tariff on all cars not produced in the United States," adding that he expects to generate $100 billion in revenue from tariffs on foreign cars.
Earlier, during his first term in 2019, President Trump also pushed for tariffs on cars. The U.S. Department of Commerce, under President Trump’s direction, investigated the impact of car imports on national security and proposed a 25% tariff on imported cars and certain auto parts. However, at that time, President Trump did not impose tariffs on cars.
As President Trump reintroduces tariffs on cars after six years, the impact on the Korean automotive industry is expected to be significant. Cars are the number one export item from Korea to the U.S., and as of 2023, Korea ranks fourth in automotive exports to the U.S., following Mexico, Japan, and Canada.
Last year, about 49% (approximately $34.744 billion) of Korea's total automotive export value ($70.789 billion) was to the U.S. The U.S. has applied zero tariffs on Korean-made passenger cars, including electric vehicles, since 2016 under the Korea-U.S. Free Trade Agreement (FTA).
On the 2nd of next month, President Trump is expected to announce reciprocal tariffs, considering the tariff rates and non-tariff barriers of various countries toward the U.S. This is likely to intensify the "tariff war initiated by Trump."
President Trump referred to the 2nd of next month, the day he warned of reciprocal tariffs, as "Liberation Day," stating, "It will be very fair and generous, and (other countries) will be surprised." He also responded to a question on whether the reciprocal tariffs would apply to all countries or only the worst offenders, saying, "All countries."